Bad weather hits December retail sales

Retail sales stalled in December because of bad weather and rising prices, according to the latest official data.

The Office for National Statistics (ONS) reported that the volume of retail sales was unchanged from the previous year. It is the first time there has been no annual growth in retail sales volume in a December since 1991.

The volume of sales in shops selling predominantly food was down 3.4% from December 2009, which was the worst performance since records began in 1988.

The fact that volume sales were unchanged, while value sales rose, suggests that the 3.7% CPI inflation in December was also deterring shoppers. December’s figures also show the last month before the increase of VAT from 17.5% to 20%.

Hetal Mehta, UK economist at Daiwa Capital Markets, said: “These are hugely disappointing figures. Of course, some fall in retail sales was to be expected given the disruption caused by the snow, but the extent of the fall suggests there is more to it than just poor weather deterring consumers.”

Barry Knight, head of retail at Grant Thornton, added: “The Christmas season provided a mixture of fortunes for the retail sector, with the snow and looming VAT increases having a significant impact on trading patterns.

“The ability to ‘one stop shop’ also helped supermarkets and department stores, as proved by House of Fraser’s and Sainsbury’s (in particular non-food) results, as shoppers avoided trudging from store to store in the cold.”